‘One-size-fits-all’ land policy won’t work, study says

Published by rudy Date posted on June 28, 2009

A congressional think tank has cautioned lawmakers against crafting a “one-size-fits-all” policy on land ownership by foreign investors.

The granting of 100-percent foreign ownership must be made on a case-to-case basis, taking into account the specific needs of an industry, the congressional planning and budget office said in a study a copy of which was obtained by Standard Today.

The study was commissioned by House Speaker Prospero Nograles as part of the plan to convene Congress into a constituent assembly that will amend certain economic provisions of the 1987 Charter. Nograles also tapped a special panel of congressmen that would serve as the “legal minds” to enlighten House members on the Charter revisions as embodied under House Resolution 737, which the Speaker and 174 congressmen co-authored. Members of the special panel are Arthur Defensor, Simeon Datumanong, Neptali Gonzales, Matias Defensor, Edcel Lagman, Elpidio Barzaga, Salvador Britanico and Liwayway Vinzons-Chato.

The study will be made available to the 263-member House when the 15th Congress opens its third session on July 27.

“It is important for policymakers to resist the temptation of protectionism and instead maintain an overall favorable and open business and investment climate,” said the study conducted last April by CPBD director Rodolfo Vicerra, and officers Novel Bangsal and Leni Lebrilla.

Vicerra explained that 100- percent foreign ownership could be granted to investments according to their needs. “The policymakers should not expressly state in the Constitution how many years they can lease or how much land they can own because it may apply to some investments but not to others like in the case of oil palm, rubber and tree crops and mining and oil exploration.”

“Based on our study of other countries, it is best that policymakers should not state one-size-fit-all policy on lands. Congress should be given the flexibility in crafting enabling laws to deal with the needs of investors on case-to-case basis,” Vicerra told Standard Today in an interview.

In the case of mining, for instance, some foreign investors may or may not opt to own the lands in which they wish to mine for ores, Vicerra said.

The lifting of land ownership control may not be enough to attract investors in the mining industry, which the study says, has been on a steady decline since 1993.

“This sector used to be a significant contributor to the national economy in 1980, generating 20 percent of the country’s export earnings. To revive this sector, there is a need to infuse huge investment capital,” it says.

“To develop and operate a single copper or gold mine requires around $200 million to $300 million,” the study says.

Vicerra explained that policymakers should consider “zoning” of lands and classify them into residential, commercial, fishery, or agricultural, as the case may be, to make sure that foreigners who want to do business would not find themselves operating in a residential area.

The congressional study allayed fears of foreigners displacing the Filipinos from their lands. “We have so many lands that are underutilized,” the study said.

“Simply put, the Constitution must not discriminate against other citizens who wanted to bring their capital here. All foreigners whose track record shows they are financially capable of putting up investments here should be welcomed,” according to Vicerra.

In the case of real estate, Bangsal for his part, said no foreigners would put up condominiums, hotels and resorts here when they can only own a certain number of units but not the land on which the condominium stands.

“The constitutional bias for domestic ownership of land cuts across all avenues of investment in natural resources: forestry, pastures, fishponds, and mining. Notwithstanding this inherent advantage, Filipino nationals have limited access to large and long-term financing for the development of long-term crops, specifically timber trees,” the study says. “In the process, many lands are underutilized.”

The constitutional land limit has long discouraged large-scale tree crop development in Mindanao in contrast to Malaysia and Indonesia, the study says.

The 1935 Constitution provides that corporations can lease up to 1,024 hectares of agricultural land for 25 years and renewable for another 25 years and can acquire alienable lands up to 25 hectares. This land ownership limit was later validated by the 1987 Constitution.

As a result, few multinational companies, engaged in the development of rubber industry in the 1950s to the 1970s, invested in the Philippines, the study says.–Christine Herrera, Manila Standard Today

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